TEHRAN (FNA)- Mercedes-Benz, a division of Daimler AG, will resume production of cars in Iran within the next two month, local media reports said.

The company is about to produce 2,500 middle of the pack E-class cars in one year time with 20 percent of the production to be done inside Iran and the rest supplied to the country in the form of completely knocked down (CKD) kits, the Iranian media reported.

Mercedes-Benz has a long track record in Iran with a business dating back to the 1950s, where it sold up to 10,000 vehicles a year. However, the company stopped business in Iran after the US and Europeans intensified sanctions on the country in 2012.

The production line for Mercedes cars in Iran is currently being updated and prepared for resuming assembly.

The contract goes back to January 2016 when Daimler signed letters of intent with local partners Iran Khodro Diesel and Mammut Group to arrange a "comprehensive re-entry" into Iran.

In September, Mercedes-Benz signed a contract with Iran Khodro to resume distribution of its trucks in the country. The deal included creating a joint venture to provide sales and after-sale services in the Islamic Republic.

Daimler has also indicated interest to return as a shareholder in the former engine joint venture Iranian Diesel Engine Manufacturing Co (IDEM) based in Tabriz to build diesel engines.

The Other German automaker Volkswagen started exporting cars to Iran in August after signing an agreement with Mammut Khodro for sales of Volkswagen brand models Tiguan and Passat.

Iran is an extremely attractive market for international automakers. Since the lifting of sanctions on the country in early 2016, French carmakers PSA and Renault have pushed hard to regain lost ground after leaving the country when sanctions were imposed.

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